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May 03, 2005

Criticism of the Bush Plan

Or, I guess it's more like criticism of a component of a potential plan, but so it goes.

The Daily Tax Report (subscription required), has good coverage in the wake of the Bush press conference. Since they've already got Senators Brownback and Allen against the indexing mechanism proposed by the President, it doesn't seem like it's got a lot of legislative legs right now. But, for what it's worth, the Democratic staff on the Ways and Means Committee put together an analysis.

Bush's proposal--once fully phased in--would result in a 28 percent benefit cut for a worker who had earned $37,000 per year. A worker who had earned $58,000 per year would have a steeper benefit cut of 42 percent. Meanwhile, a worker who had earned $90,000 per year would face a 49 percent benefit cut

A 28% reduction in benefits for people earning $37,000 a year is very serious.

Luckily, and this isn't unusual, Chris Dodd understands the big-picture choice that is being made.

Do I want to cut 50 percent of a middle-income person's retirement benefits, or do I want to ask the top 1 percent of income earners to do with a little less of a tax cut on a permanent basis? That choice is easy, and I think most of mycolleagues, Republicans and Democrats, would prefer that option

Senator Dodd has more faith in the Senate than I do. They did, after all, just pass a budget that cuts taxes for the wealthiest Americans, cuts Medicaid and other key services, and increases the deficits over the next several years.

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The subjects of every state ought to contribute toward the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state - Adam Smith, An Inquiry Into The Nature and Causes of the Wealth of Nations, 1776